Weather, sequestration affecting metals transportation

The nations metals transportation sector breathed a sigh of relief in early March, when the U.S. Army Corps of Engineers said that the Mississippi River near Thebes, Ill., had finally been widened and deepened enough to allow normal barge traffic up and down the river.

The Army Corps of Engineers has dredged more than 8 million tons of sediment from the narrow, constricted channel between Cape Girardeau, Mo., and Cairo, Ill., since last summer. Lower-than-normal snow melt in the winters of 2010-11 and 2011-12 and drought conditions last summer dropped river levels near Thebes to the point where the Army Corps restricted passage through the stretch and seriously considered halting barge traffic altogether in late 2012.

Commodities shipped on the Mississippi River and adjacent inland waterways include finished steel and aluminum, scrap, ferroalloys and metallurgical coal.

As most people have heard, the persistent drought in the Midwest is challenging the navigation industry, AEP River Operations noted recently. River conditions are predicted to remain low for the immediate future. AEP River Operations will continue to evaluate and make operating adjustments as necessary.

St. Louis-based AEP River Operations, a barge company that offers customers in the steel and other dry bulk industries a fleet of more than 3,220 covered hopper barges operating throughout the inland river system, moved more than 80 million tons of cargo in 2012.

AEP River Operations and other dry bulk barge lines in middle America coped with river closures of 16 hours a day while Army Corps of Engineers contractors worked to dredge the bottleneck near Thebes so that the channel was navigable for barges and towboats with a draft of 9 feet. Since last fall, barge tows hauling steel, scrap, metallurgical coal and other dry bulk cargoes were allowed through the Thebes passage only from 10 p.m. to 4 a.m.

The situation on the Mississippi River worsened appreciably last November when the Army Corps of Engineers began reducing water flows to the Mississippi River from mainstream dams on the Missouri River to protect wildlife habitat in the Dakotas.

In a late-November letter to President Obama and officials of the Department of the Army and the Federal Emergency Management Agency, representatives of the Steel Manufacturers Association, the Institute of Scrap Recycling Industries, the National Mining Association and other dry bulk cargo interests utilizing the nations inland waterway system asked for a presidential emergency declaration.

The groups argued that substantial curtailment of navigation would effectively sever the countrys inland waterway superhighway, imperil the shipment of critical cargo for domestic consumption and for export, threaten manufacturing industries and power generation, and risk thousands of related jobs in the Midwest. An estimated $7 billion in cargo passes through the Mississippi River bottleneck at Thebes each year, the groups pointed out.

As it happened, the Army Corps of Engineers was able to work round-the-clock to reduce rock pinnacles on the bottom of the river, giving shipping interests an extra 2 feet of water at Thebes, while Mother Nature helped to alleviate the situation with a wetter-than-normal winter in the Midwest and an increase in snow pack in the Upper Mississippi River and Upper Missouri River basins.

The Washington-based Waterways Council, which represents shipping interests on the inland waterway system, lauded the Army Corps of Engineers for hiring Newt Marine Inc., Dubuque, Iowa, and Kokosing Construction Co. Inc., Fredericktown, Ohio, to blast and excavate underwater rock pinnacles in a 1.2-mile stretch near Grand Tower, Ill., and in a five-mile stretch about 35 miles downriver near Thebes. All told, the contractors removed 365 cubic yards of the limestone formations, adding at least another 2 feet of depth to the navigation channel. Ironically, heavy rainfall has since swollen the river by 8 feet or more, the council said.

Problems with low water arent restricted to the Mississippi River. Up to 80 percent of the nations iron ore moves to integrated steel mills aboard Great Lakes bulk carriers that shuttle between the iron ranges of northern Minnesota and the Upper Peninsula of Michigan and the blast furnaces located at the lower end of the Great Lakes. Each year, an average of 40 million tons of iron pellets are delivered to the steel industry via the Great Lakes.

The Great Lakes-St. Lawrence Seaway system, which opened its 2013 navigation season in late March, has been struggling with low water levels on Lakes Superior, Huron and Michigan for years. And unlike the recent problems on the Mississippi River, the low-water situation on the Great Lakes doesnt get the media attention given to the Mississippi River.

The maritime industry on the Great Lakes is battling the same issue, but without the same level of news coverage, said Adolph Ojard, director of the Duluth Seaway Port Authority in Minnesota, the busiest port on the U.S. Great Lakes. And light-loading due to restricted drafts in small ports and shallow channels is adding to our costs.

The Cleveland-based Lake Carriers Association, which represents 17 American companies that operate 57 U.S.-flag vessels on the Great Lakes, said that inadequate dredging took a real toll on Great Lakes shipping in 2012. The drought has pushed water levels on Lakes Michigan and Huron to record lows, the association said. The water level in the St. Marys River also declined as 2012 wore on; by years end, ships were loading to less than 26 feet. In 1997, the last period of high water, ships routinely locked through the Soo drafting 28 feet or more. That loss of draft cost some ships more than 10,000 tons of cargo on their final voyages of 2012.

Dredging the approximately 10 miles of draft-restricted area on the Upper Great LakesÑmost of it concentrated on the St. Marys River, linking Lake Superior with Lakes Huron and MichiganÑis identical to the deepening project on the Mississippi River below St. Louis, and would free up Great Lakes bulk freighters to load a full 2 feet deeper, Ojard said. The cost/benefit analysis of this project is tremendous.

The Lake Carriers Association estimated that removing the 17 million cubic yards of sediment that clog the connecting channels in the Upper Great Lakes would cost approximately $200 million, about 2 percent of a federal trust fund surplus that is supposed to pay for harbor and navigation maintenance.

Looming over all of the weather changes affecting the nations transportation system is concern about what the impact of political gridlock in Washington might have on shippers.

The long-feared sequestration mandating across-the-board cuts in funding for most federal departments and agencies, including the Army Corps of Engineers and the U.S. Coast Guard, finally took effect March 1. Officials are already cutting back on overtime and handing out notices of possible furloughs. The White House Office of Management and Budget has circulated detailed guidance on sequestrable budgetary resources showing that the Army Corps of Engineers could lose $484 million in appropriations, as well as another $67 million from trust funds and other such accounts.

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